WellWorks Rework Program
From Tank to Distribution
Follow the six steps from oil collection to investor distributions. Actual timing depends on operations, purchaser payments, and the program terms.
- 1
Tank fills
Oil produced at the well flows into the lease tank battery on location, where it is stored until a load is ready for sale.
- 2
Gauger tests oil
Before the load is taken, a gauger measures the tank level and samples the oil for temperature, API gravity and basic sediment and water (BS&W). Those readings set the sale volume and quality.
- 3
Truck collects oil
The purchaser’s truck collects the measured load and issues a run ticket recording the volume and test results.
- 4
Oil delivered to Cushing
The oil is transported to market. Cushing, Oklahoma is the delivery point for WTI crude, the benchmark used in pricing.
- 5
Purchaser pays operating account
The purchaser pays for the oil, less applicable deductions, into the operating account. Royalties and severance taxes are paid from those proceeds.
- 6
Investor distributions are made
After lease operating expenses and overhead, net cash flow is distributed to investors monthly, subject to available cash flow and program terms.
Understanding Oil and Gas Settlement Statements
What is a settlement and why does it matter?
A settlement statement reflects the value of oil and/or gas delivered to a purchaser. This document provides a comprehensive record of production volumes, pricing, and net revenue. These statements serve as the financial report cards for your well's monthly performance from the oil and/or gas purchasers. They supply the essential information enabling the operator to calculate your share of net revenue and the monthly operating expense report.
Oil Settlements: Converting Barrels into Revenue
Crude oil is measured in barrels (42 gallons), but its value depends on more than just quantity — quality plays a significant role. Several factors determine the price you receive for oil:
Temperature
Oil expands when heated and contracts when cooled. To maintain consistency, all volumes are adjusted to a standard temperature of 60°F.
API Gravity
A higher API number indicates lighter oil, which produces more gasoline and diesel during the refining process, making it more valuable.
Basic Sediment and Water (BS&W)
These are impurities that diminish the value of the oil. The cleaner the oil, the stronger the price.
Benefit to You
Grasping these adjustments helps you understand the factors that may affect your returns by participating in wells that produce higher-quality crude.
Gas Settlements: Earning Revenue for Every BTU
Natural gas is measured in MCF (thousand cubic feet), but its value hinges on its energy content measured in BTUs (British Thermal Units). Key factors affecting gas pricing include:
BTU Content
Gas with higher BTU content delivers more energy per unit, commanding premium pricing.
Processing and Deductions
Raw gas often contains impurities and natural gas liquids (NGLs) that must be removed before sale. Processing fees and transportation costs are typically deducted from gross proceeds.
Market Conditions
Regional supply and demand dynamics influence the price received at the point of sale.
Benefit to You
Understanding these variables helps you evaluate well performance and appreciate the factors driving your monthly gas revenue.
Profit Calculations Made Clear
After oil and gas are sold, the net dollars received are divided by monthly sales volumes and reported to you on the monthly operating expense report, alongside product-specific sales, realized prices, royalties and taxes, lease operating expenses, maintenance and overhead.
Benefit to You
You receive a transparent view of your monthly profits broken down by well, helping you monitor performance and make informed decisions.
Transparency and Confidence
WellWorks General Partner, LLC provides this overview for educational purposes, helping you understand the mechanics behind your investments.
Ready to Build Generational Wealth With American Energy?
Contact your WellWorks representative to schedule a follow-up discussion, review the Private Placement Memorandum, partnership agreement and subscription documents, and speak with the Managing Partner and team of experts. Accredited investors only. No assurance of income or returns.